It was recently reported that Wells Timberland REIT had devalued its shares from $10 per share to an estimated $6.56 per share. Last October, the REIT suspended redemptions of shares.
With these announcements, investors are left to wonder – what is next?
Unfortunately, this progression has been seen occurring with a number of non-traded REITs, like Behringer Harvard REIT, Desert Capital REIT, Inland American REIT, Inland Western REIT, Dividend Capital, and Cornerstone REIT.
If these other non-traded REITs are any barometer as to what is likely to occur with Wells Timberland REIT, further devaluation is likely.
Another concern for investors is the current market value of the REIT. While the Board of Directors of Wells Timberland REIT recently announced that the shares were now worth an estimated $6.56 per share, this is a book value for the shares. This value is assessed as the difference between the REIT’s assets and its liabilities.
The problem with this valuation is that the shares are illiquid and it is unlikely that the secondary market is paying anywhere near $6.56 for Wells Timberland REIT shares. Due to the illiquid nature of non-traded REITs, the buy side of the secondary market is usually inhabited by enterprising and sophisticated venture capital firms and hedge funds. These entities know that the sellers of non-traded REITs are often desperate for liquidity so the offerss are often for significantly less than the book value of the underlying assets. With any real estate investment, though, the “true value” is whatever someone is willing to pay so it is likely that Wells Timberland REIT is currently worth less than the stated book value.
The good news is that investors may be able to recover their losses.
The White Law Group continues to file FINRA arbitration claims involving non-traded REITs, like Wells Timberland REIT, against the brokerage firms and financial professionals that recommended the products.
Financial advisors and broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives. Unfortunately for investors in non-traded REITs, brokerage firms often down play the risk of these products to their clients and sell the investments as safe, income producing investments.
If you invested in Wells Timberland REIT and are interested in your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.